In re Kilpatrick
United States Bankruptcy Court for the Eastern District of Michigan
160 B.R. 560 (1993)
- Written by Steven Pacht, JD
Facts
Bruce Kilpatrick (debtor) entered into a noncompetition agreement with G&C Disposal Corporation, which assigned its rights under the agreement to Pollard Disposal, Inc. (Pollard) (creditor). Alleging that Kilpatrick violated the agreement, Pollard obtained a Michigan-court preliminary injunction ordering Kilpatrick to honor the agreement. Kilpatrick subsequently filed a petition pursuant to Chapter 13 of the Bankruptcy Code (code) and asked the bankruptcy court to prevent the enforcement of the injunction pursuant to the code’s automatic-stay provision (11 U.S.C. § 362(a)), arguing that Pollard’s rights under the injunction were tantamount to a claim against Kilpatrick. Pollard responded by disavowing any right to a monetary payment if Kilpatrick violated the injunction and seeking a declaratory judgment that the injunction was not tantamount to a claim and thus was not dischargeable in bankruptcy. Kilpatrrick countered that (1) under code § 101(5)(B), a right to equitable relief was a claim if breach of such relief gave rise to a payment right and (2) under Michigan law, a noncompetition agreement could be enforced via either an injunction or damages.
Rule of Law
Issue
Holding and Reasoning (Spector, J.)
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